Telecoms competition arrives in numbers

The Independent Communications Authority of South Africa (ICASA) has announced that it had converted Broadcasting Services, Electronic Communications Services, Electronic Communications Network Services licences in terms of section 93 of the Electronic Communications Act.

The recent court rulings – which included a ruling that VANS were allowed to self provide and subsequently qualify for IECNS licenses – means that ICASA awarded Individual Electronic Communications Network Services licences to numerous VANS.

The new IECNS licences level the playing field in terms of the rights granted to licence holders. All IECNS licensees have the same rights which effectively means that Telkom, Neotel, Vodacom, MTN, Cell C, iBurst and Sentech don’t have any advantage over VANS in terms of self-provisioning network rights like they did before the new Electronics Communications Act (ECA).

ICASA released a complete list of all converted licences, and this list reveals that a total number of 287 applicants are to receive IECNS licences while another 257 have been granted IECNS licences which have not been issued yet.

11 of the new IECNS licence holders are former PSTS, MCTS and Wireless Data Services licence holders while the rest are former VANS. All licensees which have been granted IECNS licences which have not been issued yet – 257 in total – are former VANS.

Positive impact

The smaller telecoms companies and ISPs welcomed the licence conversion, saying that it would definitely enhance competition and have a positive impact on the South African telecommunications market.

“The newly converted licensees can now start making use of their own technologies to provide links to their own and other operators’ networks legally. This means that the link from the Neology offices to the JINX peering point, or even to Telkom – can now be supplied by ourselves, legally,” said Diedericks. “This will have a huge impact on the cost of local and, for example, corporate customer access.”

ECN CEO John Holdsworth agrees, saying that he sees this as a major step towards fostering a competitive telecommunications industry in SA. “New entrants now by and large have the same rights as the incumbent operators,” says Holdsworth.

Not everyone will however build their own networks which can be expensive and may require spectrum if providers opt for wireless technologies. “ECN will continue to lease network capacity from the incumbent operators. ECN will only build its own network where it makes economic sense. It does not make financial sense for new entrants to replicate the incumbents existing networks,” said Holdsworth.

“The big thing is that one has to balance the CAPEX versus the revenue possibility. I believe many service providers are going to start building networks on the same principle,” added Diedericks.

The right to build your own network is however only one advantage of the new IECNS licenses as Holdsworth points out: “In ECN’s opinion, the major advantage of having an i-ECNS license will come from access to regulations such as CPS, LLU, number portability and facilities leasing. These regulations will provide ECN with access to the incumbents established core and access networks at competitive pricing.”

Spectrum another battleground

While an equal playing field in terms of licence rights is a big leap forward in the quest for a more competitive telecoms environment, the next, equally important, battle will revolve around spectrum allocation.

Without adequate spectrum new entrants will find it difficult to compete against established operators in network rollout and service delivery. Wireless networks make it cheaper and faster to provide service to consumers, but spectrum is an essential ingredient to enable new players to build such networks.

Many industry players expect a great deal of interest in the 2.5 GHz WiMax band as well as a particularly fierce battle for the lower frequency 700 MHz spectrum. Lower frequencies allow for better coverage and better in-building penetration – something which is of great value in metropolitan areas.

Many telecoms players also express unhappiness with companies such as Sentech owning large chunks of very valuable spectrum which they are not effectively using to provide telecoms services. There is a strong call for a use-it-or-lose-it policy which will re-distribute this spectrum to operators which will make the most of this valuable resource.

Diedericks adds that not all the focus should fall on wireless technologies. “There is a lot of discussion around the issue of spectrum allocation, but it has to be noted that radio access is not the only means of delivering services. In fact, it’s probably the smaller portion of high bandwidth applications that can successfully make use of radio access.”

“Issues like local loop unbundling and rights of way are now going to come to the fore, as service providers look at all technologies – copper, fibre, and radio to deliver services,” Diedericks said.